Session. Its been a flight to safety defensive sectors including real estate and utilities are leading the market, and gold is higher and rates moving lower rates falling below 2 once again. Thanks. We begin with optimism on trade talks with china President Trumps trade adviser Peter Navarro on cnbc earlier said were headed in the right direction as the u. S. Plans more tariffs on europe in the meanwhile. Peter navarro is the white houses fire brand on china, so it was notable this morning after attending that u. S. china meeting that produced the weekends truce, he said its all good were reengaged. Were talking on the phone already. Probably be visits its all good. I think it was a pause that was necessary at the time, but this is very bullish for the markets. Lower uncertainty in terms of the whole thing. Were headed in a very good direction. Next up is figuring out how to slice up huawei along National Security lines. The white house and the Commerce Department are today hosting a meeting to discuss options, according to a Senior Administration official. I asked navarro about that meeting before his appearance, and he refused any questions other than what he was asked on air. There are some deadlines up ahead we should look at. The white house has until just before labor day to decide how to proceed with huawei when temporary licenses for the company and its 68 affiliates are set to expire. While President Trump announced this truce would be openended, there are two other dates you should watch a meeting between President Trump and president xi is expected to take place at the apec summit in november in chile, and the first election primaries in the u. S. In february tyler. All right, thank you very much so Peter Navarro saying were headed in the right direction on trade talks with china, but are we really getting any closer to a deal andy rothman is an investment strategist with matthews asia, and derrick scissors is asia economist with the America Enterprise Institute derrick, as i listen to mr. Navarro, who is often a very skeptical voice about the possibility of getting a deal with china, it sounds like somebody talked to him and said hey, we need a positive spin here are we literally closer to a deal, or are we merely back to where we were in early may in. I think were back to where we were in early may with a possible variance on whats going on with north korea. Yes, peter definitely sounded like his main point was stock markets should be happy. We didnt get a date for new talks. We didnt gehow much the china are going to buy, we didnt get any details, but stock markets should be happy. Andy, how do you see this does this mean a deal is closer . It sounds as though the huawei issue is being ameliorated if not taken off the table. Well, remember that secretary mnuchin claimed that back in may, before things blew up, they were 90 close to a deal so thats back on track, and i take Peter Navarros words as a very optimistic approach to that, but more importantly, for me, was what the president had to say over the last few days about his meeting with xi. He talked about a strateging partnership. He talked about welcomic Chinese Students back. He talked about allowing American Companies to sell to huawei so i think he really kind of threw his National Security team under the bus here by emphasizing the trade relationships and engagement rather than a confrontational approach to china. Thats a very positive change from just a week ago it seems that way, derek, at the same time, what is going on in hong kong, im wondering how that factors in at all president xi is a nationalist at heart. He believes in the power of the communist party and consolidating that power, and whats going on in hong kong may threaten that power. I wonder if he could be taking a harder line in the weeks to come because of that backdrop i agree that president xi, i would call him a brutal dictator beyond being a nationalist i do think hong kong is a potential threat to u. S. china talks. The rallies in hong kong have lasted longer thani expected, at least, and the chinese have been, from their standpoint, patient. I dont expect xi jinping to be patient forever. There is a wild card, i mentioned the wild card being north korea. On the Positive Side on the negative side for the talks, hong kong could be a negative card. What are the opportunities right now stock wise, investment wise, if you believe theres a deal on the horizon . Well, i think that hasnt changed. China remains the worlds best consumer story you have retail sales in real terms growing at over 6 you have income growing in real terms at over 8 its a fantastic consumer story with a middleclass thats now as big as americas middle class, and thats where were looking for opportunities for our clients. So more along the domestically facing Chinese Companies as opposed to manufacturers or stateowned enterprises. Thats right. Chinese Companies Selling goods and services not just Internet Companies but names that might be less familiar for your viewers, but any Chinese Company selling goods and services to chinese consumers. Thank you very much andy rothman, derek scissors, we appreciate your time today well, despite all the trade fears, this is now officially the longest u. S. Economic expansion in history two Pillars Holding up the markets are showing signs of weakness share buybacks contracted for the first time in seven quarters, and companies are warning earnings are going to be brutal, more than 75 of Companies Issuing preannouncements saying profits will miss expectations lets brin in lisa ericson, and jack avalon, cio with crescent capital. Thanks to you both for being with us. Lisa, it sounds like youre relatively conservative, although youre advising clients to stick with their longterm stock allocation what does that mean in terms of how you might change that allocation even at the fringes in terms of what youre allocated to, even though your total equity allocation may remain the same . Well, right now, were actually advising our clients to stand pat on their equity allocations, and as far as regional exposure, we think its good to continue to have a diversified exposure across the u. S. , efa, and emerging markets. The reason why is if you look globally, were still expecting moderate growth, both in terms of the macro outlook as well as the earnings outlook there is some slowing in the earnings picture, overall, our indicators would show that the fundamentals are still looking okay Going Forward whats amazing, jack, you read the stats 77 of companies have preannounced so far for the Second Quarter, yet were sitting basically at record highs. Is that sort of a good thing, we sort of worked our way through that concern and the markets may be reflecting it already it could be i mean, the fact is youre right. Analysts are expecting a 2. 5 earnings decline year over year through the Second Quarter, but keep in mind that analysts have expected a similar decline in the first quarter. And companies were able to beat and get that Earnings Growth positive so i think that investors are looking at that, saying look, you know, one quarter, maybe its negative, maybe its flat, but as we start looking out into q3 and q4, we start to see Earnings Growth expectations ramp up. What do you expect from the fed, jack . Well, you know, what i think the fed should do and what i think the fed will do are probably two different things. One is i dont think the fed needs to reduce rates to ease economic tension or to continue to grow the economy. I think the fact is were on a 2 to 2. 5 growth path we should be able to do that without the help of the fed. But as melissa mentioned earlier, buybacks are starting to run dry, and i do think that we do need help from the fed to keep the stock market going. And if you look back over the last five years, earnings per share has doubled the pace of net income, largely because were reducing the denominator of that equation, shares outstanding. Lisa, i wanted to ask about what is gaining in todays session, what has gained in past sessions thats the safety trade. Utilities, for instance, are up today. If a client came up and said i want safety and i still want to be allocated to stocks with stocks close to record highs, is it worth paying 20 times current earnings for utilities which is a premium to the s p 500 or for some staple stocks, for instance how do you navigate that well, our favorite sector is actually more growth oriented. The reason why is we believe in a more moderate growth environment. Ultimately, investors are going to benefit from the extra ounce they can get with sectors such as technology or Consumer Discretionary. What were really favoring are those industries where, again, some of the top down changes were seeing in terms of more movement to cloud computing, demand for robotics, really should benefit some individual companies and names in those areas. And we agree with you, as well, that with the flight to safety, some of those valuations in the more defensive sectors are less attractive lisa and jack, same question for both of you. And i think i know the answer. Jack, your year end target for the s p 500 is 3,000 lisa, yours is 2,970 were at 2,965 right now if im sticking around to eke out 5 or 35 more points, shouldnt i just go to cash . I can tackle that obviously, were taxpayers were not, you know, and given that the market is up nearly 300 since the financial crisis, theres a huge potential tax burden so one of the things we have to do is weigh the consequence of paying a 20 Capital Gains tax against, you know, dry powder and trying to get cute and get back in. We only own equities with a minimum sevenyear time horizon from here. So it really will take a lot for us to kind of move us off that longer term trajectory quick answer, lisa. Jacks is good one yeah, i think your point on maybe the flat to the moderate outlook does raise the question of really should you be going underweight equities, but were again recommending a more neutral position, staying at your longterm strategic position simply because if you look at the alternatives, really, bonds are not very attractive either in terms of their valuation. When we look at the alternatives, we think more diversified exposure makes sense in terms of weighing off the fundamentals, the sentiment, and the technicals thank you so much coming up, three stocks were watching delta getting a lift as it raises guidance. Anheuserbusch planning the years biggest ipo forget uber, and can tesla deliver when it reports develiry numbers . All that and more coming up on power lunch. Most of us dont know how much data we use, but we all know were paying too much for it. Enter xfinity mobile. Americas best lte with the most wifi hotspots, combined for the first time. When youre near an xfinity hotspot, youre connected to wifi, saving on data. When youre not, you pay for data by the gig. Use a little, pay a little. Use a lot, just switch to unlimited. Get 400 back when you buy the new lg g8. Call, visit or click today. Shares of Delta Airlines up at this hour but off session highs. Phil lebeau joins us from chicago with the details this comes a week before delta will give us the q2 numbers but its clear from the new guidance today theyre expecting a strong Second Quarter, certainly stronger than what many people might have been expecting. Heres the guidance from delta released this morning. It is giving sears a bit of a prop eps, up 20 cents now between 225 and 235 a share for the quarter. Revenue, now 8 to 8. 5 . And the total revenue per available seat mile, that will now be up 3. 5 before they said, it might only be up 1 to 3 they had record passenger levels in june. That is a key metric that is going to get some attention. The record passenger levels in june, along with the pricing being relatively strong is the reason that youve got total revenue per available seat mile being up 3. 5 , at least thats the expectation. As you look at shares of delta, remember they will be reporting earnings neck week were going to talk with ed bastion all about the quarter and what hes seeing with the economy overall and demand for air travel and phil, delta hasnt been exposed to the max maybe thats an advantage. Were seeing American Airlines down about 2. 4 . They canceled some routes because of that. At least one between oakland and dallas, and that is because, look, they are canceling about 115 flights daily because they dont have the full complement of aircraft. And as much as they can, theyre trying to say okay, where can we pull back where we have to pull back, because we dont have as many aircraft as we originally planned. And this is one of those instances. Wow phil, thanks meanwhile, the worlds Biggest Beer Company is planning the years biggest ipo Frank Holland has those details. Its been a big year for ipos this one is even bigger. This could raise as much as 9. 8 billion dollars for ab, given budweiser asia a market cap of nearly 64 billion the shares will be offered, asia pacific generated about 18 of revenues last quarter with nearly 8 growth in china compared to 1 here in the u. S the Chinese Market is also more than twice the size. In asia, they sell corona and guinness as well as budweiser, marketing the imports as premium, quote unquote according to estimates, they control 46 of that premium segment in china the ipo could also reduce debt for the company. It is aiming to reduce its net debt to below four times by the end of 2020. Was at 4. 6 times at the end of 2018, and that wasnt enough, this could also lead to acquisitions in asia the ceo telling the financial times, the number one reason to do the listing is to have a platform in the region that is seen as closer to those markets and connected to what the region will do since thats something that can be attractive to local groups i spoke to analysts. They agree having shares of a local company to offer potential sellers would actually be more attractive if the company decides to do more accusations they must have been breathing a sigh of relief over the trade truce. Theyre an international company, so theyre not as sensitive to the trade truce i talked to a couple other shippers, dhl. They said were not as shaken up because we dont have to deal with the same restrictions that holded the same for them. European leaders have nominated imf chief Christine Lagarde as the next president of the central bank if confirmed, shell take over when Mario Draghis term comes to an end in october hes played a huge role in the economic recovery. Leguard has led the imf since 2011 shes a trained lawyer, just like powell. Shes not a trained economist. You could say shes a trained politician, which might be effective for this role. Sara eisen points out she would be the first woman head of the ecb, so this could be historic in many ways. Jerome powell isnt an economist per se he made his career in investment banking. Very interesting shes no stranger, Christine Lagar lagarde, to the International Stage or bankers shares of tesla soaring in the past month theyre up more than 20 , can the run continue when the Company Reports delivery numbers . Trading nation is next, and nike putting its foot into another controversy. Pulling sneakers, its reported, with the betsy ross american flag, reportedly after Colin Kaepernick intervened. Chorontry to explain the story mu me that coming up on power lunch. Lets do it. [ sniffing ] come on. This summer, add a new member to the family. Hurry into the mercedesbenz summer event today for exceptional offers. Lease the glc 300 suv for just 419 a month at the mercedesbenz summer event. Going on now. Welcome back to power lunch. Im mike santoli at the New York Stock Exchange tesla shares slipping today as investors await Second Quarter delivery numbers which could drop any day now those losses more pain for the stock already on track for its worst year ever. Craig johnson of piper jaffray, and quinn are your trading nation team today. Craig, this stock, tesla has, has had a decent rebound offer a pretty overstretched condition at the lows. But still, most of its trading range in the last two years is above it how do you see the stock right now . You know, mike, youre right. The stock is up 20 over the last month, but youre still down about 33 year to date. When you look at the chart, youll see this is a stock that had broken below a multihp year consolidation range channel. Its having a nice relief rally in here, but unless the stock can recapture the lower end around 240, i suspect the stock is perhaps going to stall here if it does, look for a whole other leg lower. While our analyst alex potter likes the stock with a 396 price target, technically, we look at this chart with a little bit more of a cautious perspective. As we havent recaptured the trading range, and it still looks like just a relief for us. Still some more to prove for the bulls, i guess suspense around the delivery numbers. Its a 40 billion company, we go every three months how much product they manage to make and sell how do you see the company fundamentally here cloudy. Its very, very difficult. Theres really no financials to speak of you have a company that is going to need, i mean, they have even discussed, theyre going to continue to hit the Capital Markets to raise equity. Capital through equity and debt. I think you have to really, i have to defer to craig on this one an